White House Announces New Efforts on Most-Favored Nation Drug Pricing

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On July 31, President Trump additional actions following up on his May 21 executive order (EO), titled “,” in letters to 17 pharmaceutical manufacturers outlining the steps they “must take to bring down the prices of prescription drugs.” The language in the EO is vague and does not include a definition of “most-favored nation pricing” (MFN).

The letters direct the manufacturers to take the following actions in the next 60 days:

• Extend MFN pricing to Medicaid. The letters tell manufacturers to extend MFN pricing to all Medicaid enrollees.
• Guarantee MFN pricing for newly-launched drugs. The letters direct manufacturers to “guarantee Medicare, Medicaid, and commercial payers receive MFN prices on all new drugs” by establishing a “contract” with the government.
• Return increased revenues abroad to American patients and taxpayers. The letters command that manufacturers “negotiate harder with foreign freeloading nations.” In a White House , the Administration notes that “the United States has less than five percent of the world’s population, yet roughly 75% of global pharmaceutical profits come from American taxpayers.” The letters stipulate that “increased revenues abroad must be repatriated to lower drug prices for American patients and taxpayers.”
• Provide for direct purchasing at MFN pricing. The letters direct manufacturers to participate in direct-to-consumer and/or direct-to-business distribution models “so all Americans get the same low MFN prices that manufacturers already offer to third-party payers.”

The letters instruct manufacturers to submit “binding commitments to each of these goals” by September 29. In addition to the above directives, the letters inform manufacturers that if they “refuse to step up,” then the government “will deploy every tool in our arsenal to protect American facilities from continued abusive drug pricing practices.” The letters do not specify how the government could mandate compliance with these demands, and it is likely the government does not have authority to mandate at least some of these actions.

Manatt on Health subscribers can access the full analysis of the EO .

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